European stocks fell, following yesterday's rally for the Stoxx Europe 600 Index, as a report showed that U.K. construction expanded less than forecast.

The Stoxx 600 slipped 0.5 percent to 286.96 at 4:30 p.m. in London. The equity benchmark advanced yesterday as euro-area factory output contracted in June less than estimated and Japanese manufacturers turned optimistic for the first time since the third quarter of 2011. The Stoxx 600 advanced 1.7 percent last week as China sought to ease a cash crunch. The gauge still lost 5.3 percent in June after Federal Reserve Chairman Ben S. Bernanke said the central bank could reduce stimulus measures if the U.S. economy improves in line with its forecasts.

In the U.K., a report showed that construction rose less than forecast in June. An index of activity in the industry climbed to 51, from 50.8 in May. That missed the median economist estimate for a reading of 51.2.

In the U.S., a Commerce Department release showed that orders placed with U.S. factories rose 2.1 percent in May, following a revised 1.3 percent advance in April. The median forecast of economists had called for a 2 percent gain.

National benchmark indexes retreated in 13 of the 18 western-European markets today.

FTSE 100 6,303.94 -3.84 -0.06% CAC 40 3,742.57 -24.91 -0.66% DAX 7,910.77 -73.15 -0.92%

Fresenius Medical Care slumped 8.8 percent to 49.63 euros as the U.S. government's Health and Human Services Department proposed cutting payments to kidney-dialysis centers from next year. Payments to the German company, which runs clinics offering the procedure in the U.S., may drop 9.4 percent in 2014 under the plans to reduce spending on Medicare.

Telefonica Deutschland declined 1.5 percent to 5.45 euros after Commerzbank cut the German business of Telefonica SA to hold from buy. The brokerage said that new uncertainties, including a probable spectrum auction in Europe's largest economy in the next two years, limit the shares' upside.

RWE AG and EON SE led a gauge of European utilities lower, declining 4 percent to 22.32 euros and 2.1 percent to 12.17 euros, respectively. Morgan Stanley removed RWE from the list of its best ideas. The brokerage reduced its earnings-per-share estimates for 2014-15 by as much as 13 percent, saying that Germany's second-largest power producer faces a difficult market in the near term.

Erste Group Bank AG lost 2 percent to 20.01 euros as Austria's biggest lender sold 661 million euros ($861 million) of new shares to help repay state aid in a deal that reduces the stakes of its key shareholders.

Michelin & Cie. (ML) increased 2 percent to 70.55 euros after UBS raised Europe's largest tiremaker to buy from neutral, citing improved cost positions that enable more competitive pricing and higher profits.